On How Americans are being Gouged and Made more Unequal by the Internet Monopolies (Moyers Video Interview)

Bill Moyers interviews Susan Crawford on the virtual monopoly on internet provision held in the US by a few companies, who overcharge those who can afford their rates, exclude the poor, and give us slow, crappy service compared to more advanced and enlightened countries where being slaves of the corporations is frowned upon.

The blurb for the show:

“Susan Crawford on Why U.S. Internet Access is Slow, Costly and Unfair
February 8, 2013

Susan Crawford, former special assistant to President Obama for science, technology and innovation, and author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, joins Bill to discuss how our government has allowed a few powerful media conglomerates to put profit ahead of the public interest — rigging the rules, raising prices, and stifling competition. As a result, Crawford says, all of us are at the mercy of the biggest business monopoly since Standard Oil in the first Gilded Age a hundred years ago.

“The rich are getting gouged, the poor are very often left out, and this means that we’re creating, yet again, two Americas, and deepening inequality through this communications inequality,” Crawford tells Bill.

9 Responses

Whatever happened to the notion of regulated monopoly and the idea of a natural monopoly? It used to be that AT&T was one. We had an excellent phone system with universal coverage. Rates were set by public utility commissions. AT&T was allowed to supply dial tone but no services beyond that.

Today many power companies operate under such a system; a regulated utility that owns the distribution network with rates controlled by the government. The power generation part of the system operates in a competitive environment. This system seems to work well.

The internet should be structured the same way. A regulated utility would own the fiber with rates set by the government. The utility would not be allowed to provide content i.e. the web, phone service, and video.

Such a structure works well and has a long history in America. It is time to apply it to the internet.

When now a precocious three year old in Tierra del Fuego can download porn from a server in Siberia at no incremental cost to the parents, I don’t think lack of connectivity and bandwidth can be the route cause of any of our problems.

The term “information age” is rarely heard these days because a large majority of the people have connectivity and bandwidth that would be science fiction thirty years ago, yet where is their evidence that it has brought us broad wealth, political sophistication, or communal understanding. The Internet is a great all-you-can-eat candy store, and I eat my share, but I don’t think it has proved to be an improving influence on society, yet.

But how easy access between countries affecting everyone outisde the US? Doesn’t it seem that for some years there has been a growing gulf between the beliefs of Americans and the beliefs of the Rest of the World? Many cynics always believed that our fellow Americans are just stupid bigots and nothing can be done about it. What would happen if American kids were in fact constantly reading foreign websites and their stupid bigot parents didn’t know about it – or didn’t understand how much their own attitudes are the product of ignorance and xenophobia?

The “Internet effect” is all around you, but like most people you fail to see it because it is very subtle and the changes have taken place over a somewhat long period.

I have been on the Internet since 1974 so may be more aware of the sociological and economic changes brought about by the Internet.

The Internet has brought wealth to many, from the usual suspects of internet entrepreneurs to farmers in Africa that can now sell their products direct to wholesalers in Europe instead of to local price gougers. There are many, many examples where better communication and information resources has vastly improved many lives, especially in the countries that have chosen to treat the Internet as a national resource and forced local communications vendors to provide high quality service at reasonable prices.

Basically most countries other than the US have discovered that having an extensive and high quality communications infrastructure provides the basis for many improvements to the lives of the people in the country.

The internet has also improved the rate of innovation as scientists, engineers, doctors and other professionals around the globe can now collaborate in near real-time on discoveries. When my late wife got cancer, her oncologist and I used the Internet to discover the latest research on her illness. In the past, this information would not have been available to us. While we did not find any better treatment, it helped us avoid doing things that would have just caused pain with no help.

While the Internet can be a great toy, it also means I can provide consultation to clients all over the world without spending my life on airplanes.

Just the fact we are able to have a better understanding of the world by reading this web site, is an example of the benefits of the Internet.

As transportation costs increase over the next few years, the Internet will allow a better exchange of goods.

P.S. – Yes, I have really been on the Internet for over 35 years – I was lucky to attend one of the universities that helped start up the Internet and then worked for two companies that were also part of the original network. I used the original Mosaic web browser long before “normal” people did.

I had a problem with my computer a few months ago, and I had a technician working on it remotely from western India. At one point while a diagnostic tool was running, he said, “Wow, your internet is not very good.” I couldn’t help but agree. I knew my internet was terrible (I live in a medium-sized city on the Great Plains), but for someone in a “developing” country to marvel at how bad it is really put it in sharp perspective.

– The fibre, twisted pair and coaxial copper networks are NOT expensive to build, because over 85% is ALREADY built and paid for (actually most of it has been paid for several times over because of arcane tax and regulatory laws).

– Virtually all of the backbone copper has already been replaced by fibre because fibre is more cost effective in the backbone. This fibre paid for itself via lower maintenance costs within three years AND was also used as a tax deduction for ten years (in other words, it has been paid for multiple times).

– While it can be very expensive to change the last few hundred feet of twisted pair or coaxial copper to fibre, it is NOT technologically necessary, since short distance of copper can carry very high bandwidth. Copper’s problem is the loss over long distance. For example, many business offices have no problem delivering 100 MBPS over several hundred feet of copper.

– The cost of a fibre to copper terminal device is less than US$25/port – a ONE TIME COST. These terminal devices can easily be installed on every street corner to provide high capacity bandwidth to homes and businesses (which is exactly what most other countries are doing).

– All telco and cable central offices have vast amounts of excess space since most of the buildings were built prior to 1960, so there is plenty of room for very inexpensive fire equipment.

The bottom lines are:

– the cost of the fibre/copper from the telco/cable central office to a home or business is US$ 0.00/month for over 85% of the US since it has already been paid for multiple times.

– The cost of the fibre/copper terminal device at the curb, spread over 36 months is LESS than US$ 1.00/month.

– The cost to run the data switches (shared by all internet users) is leas than US$ 3.00/month.

– The cost to provide the CEO a big jet and a luxurious life style while screwing Americans is about US$ 50/month.

The reality is the actual cost to provide wired broadband service is less than US$ 5.00/month, including a reasonable profit.

Note that wireless data is a different story because converting to LTE wireless data does require a complete rebuilding of the physical wireless network, but the cost of the LTE equipment is not so high as to require extremely high wireless bills.

BUT note that even with LTE, the wireless data service will fail in a few years due to basic physics and Shannons Law. It is physically impossible to provide LTE data service to every human on earth, especially in metro areas.